UK House Prices Could Fall a Further 35% - Homes Still Not Affordable

Comment By: Christopher Brown

Date: 2009-06-12 13:42:49

Comment:
I agreee with most of this article. However, to say that house prices will recover before it hits 4x earnings is laughable. Look to the past and you will find that house prices and equities always overshoot at the bottom and the top. We have a lot longer to go into this recession yet.

Comment By: John Smith

Date: 2009-06-15 18:21:31

Comment:
I'm a financial journalist and trying to figure out your reasoning. I guess as long as the PE ratio index (which specific index are you referring to?) is consistent over time then it should be useful. Are you saying that it used to include non-homeowners and now excludes them?

Comment By: Paul Forrester

Date: 2009-06-19 11:37:54

Comment:
Your line of argument seems fairly conventional and routine to the point where you state that 'the average UK house price is 7.5 times the average salary'. Then, it appears that such a multiple is too extreme, so you proceed to remove part-time workers and low-income earners salaries from the average salary, quite arbitrarily. This, conveniently reduces the P/E ratio from 7.5 to 6.2.
Neat! The only proble, of course, is that you have massaged the statistics a tad, rendering your article of very little vaalue.

Comment By: Liam Bailey

Date: 2009-06-20 19:08:37

Comment:
To Paul Forrester,

What you have described does not qualify as massaging the statistics, the statistics are the statistics, it is only the interpretation of them that is changed by removing part time workers.

Also I fail to see how that takes away the value from the article, given the fact that I have mentioned the p/e ration for part time workers and full time workers only, surely that increases the value?

Comment By: Hickling

Date: 2009-06-20 19:08:37

Comment:
Since when as someone on an "average" wage been able to afford to buy a property? Please indicate the year. In my opinion this has never been the case. basically first time buyers can only get on the property ladder either by buying jointly or with a significant help from family (or good financial planning). Therefore an interesting question would be as a first time buyer with a partner what is your average income? If it is two times the national average then we are already back to around 3.7 times joint income so away we go with another round of house price increases!

The real statistic is what is the average wage of home owners (excluding the 30% of people who cannot afford it) and the conmparison against average house prices? My view is we are a lot closer to *3.7% than *7.5. However, I think we are still in for a further 10% drop due to lack of mortgage availbility and job security.

Comment By: Paul Forrester

Date: 2009-06-23 16:55:00

Comment:
You state "..most impartial analysts believing that UK house prices will fall until the average house price is less than or equal to 3.7 times the average UK salary" As a result, you are able to advise "Going by that the average UK house price is 7.5 times the average salary". However, subsequently, you contradict yourself stating "the average UK house price is 6.2 times the average UK salary". So what is the definition of the average salary, according to most impartial analysts - the average salary of all UK workers or the average salary of UK full-time workers?